Chinese President Xi Jinping (left) is being shown around Huawei’s offices in London by its founder Ren Zhengfei, in October 2015. One of the primary concerns about Huawei’s operations is its link to the Chinese state. Photo: Reuters
by Tianyu M. Fang
by Tianyu M. Fang

To win US credibility, Huawei needs to be transparent and show that it is not China’s mini-me

  • As a global corporation, Huawei’s opacity about its ownership and governance is earning it discredit. Even its ferocious work ethic is coming under scrutiny as a ‘sacrifice’ its foreign rivals would not have allowed
At the height of escalations in the US-China trade dispute, United States President Donald Trump issued an executive order to effectively ban Chinese tech giant Huawei from selling equipment to US telecommunications businesses. Subsequently, the US Department of Commerce added Huawei to the government’s “ entity list”, restricting the company’s access to US suppliers. Both decisions cited national security concerns.
Beijing was, unsurprisingly, not happy with this. In December, the Canadian government detained Huawei chief financial officer Meng Wanzhou in Vancouver as Washington suspected the company had violated US sanctions against Iran. In an obvious move of retaliation, China immediately arrested two Canadian citizens, Michael Kovrig and Michael Spavor, accusing them of espionage.
Huawei’s shady connections with the Chinese government and its key role in China’s 5G development may perhaps explain its significance in the trade war. But there is more to that: Huawei is a microcosm of the Chinese political system – a system the US is gradually losing patience with.
One of the primary concerns about Huawei’s operations is its link to the Chinese state. On paper, the telecommunications giant is a collective jointly owned by its founder, Ren Zhengfei, and its trade union; the company claims that only its employees – and certainly not the Chinese government – control Huawei.
But the company offers little transparency to support its claims. In a recent study, scholars Christopher Balding and Donald C. Clark find Huawei’s claim about its ownership structure rather misleading.

While a “trade union committee” claims 99 per cent of its ownership, the committee’s internal governance procedures remain a mystery to the public as members of the trade union have no control over its assets. “Regardless of who, in a practical sense, owns and controls Huawei,” the authors conclude, “it is clear that the employees do not.”

In parallel, the Chinese Communist Party itself runs on similar murkiness. The Chinese political scientist Zhang Weiwei, among many pro-party scholars, characterises the Chinese political system as a meritocracy that selects the most competent decision-makers not through an electoral process but from within the party.

But no one knows for sure how leaders are elected within the politburo – and how decisions are made behind the scenes – until the state presents to its citizens and the world a fait accompli.

The Chinese government’s lack of transparency goes beyond its own governance. International watchdogs have long suspected China’s human rights abuse at its western frontier of Xinjiang, where Muslim populations are forced to enter so-called “re-education camps”.

Beijing first denied the camps’ existence, and later conceded that while these camps did exist, their size and purpose were exaggerated.

Foreigners are welcome to visit the region, the ministry of foreign affairs said. But as foreign news organisations looked for a definite answer, their reporters were followed, and investigations were thwarted by local police. Some journalists, after having covered the region, were no longer granted visas to continue their reporting.

Huawei and the Chinese government have been doing much public relations work to change their global images, but without fundamentally bringing more transparency to the table, such efforts will continue to be futile. China’s closed door to international scrutiny – like Huawei’s – can easily build up American distrust of China’s government.

As one of China’s first electronics manufacturers, Huawei – which, in Mandarin, literally means “China’s excellence” – embodies a sense of Chinese nationalism. Its rapid global expansion and, more recently, achievement in 5G development symbolise China’s rising power to ordinary Chinese people.

One may attribute Huawei’s achievements partly to support from the state, but its corporate culture must not be overlooked. The company excels by creating a notoriously intense work environment, often at the cost of employee health and basic rights.

As tech writer Elliott Zaagman characterised, Huawei’s “ wolf culture” involves “a battlefield-like mentality, intensity, and obsessive focus on results at any cost”. Huawei secured its rapid growth by making sacrifices that its foreign competitors would not have allowed.

The Chinese government has achieved tremendous success over past decades in poverty alleviation, economic growth, and technological development at the cost of human rights, intellectual property laws and fair-trade practices. The rising China seems to falsely believe that the ends justify the means.

The ongoing bipartisan US action against Huawei shows America’s deepening distrust of the Chinese government and the principles of its political system. The US side of the trade war is not demanding tweaks in China’s trade practices, but questioning the foundations of the rising Chinese state.

Tianyu M. Fang is a freelance writer based in Boston and Beijing. He writes about politics, technology and culture